The opening of the No. 2 U.S. discounter's first Canadian store this spring comes at a time when other retailers are also looking to expand north of the border. To do so, they will have to vie for prime real estate assets.

Primaris owns some 35 properties in cities across Canada, including the Dufferin Mall in Toronto, the Cornwall Centre in Regina, Saskatchewan and the Tecumseh Mall in Windsor.

Its tenants include Canadian household names such as Hudson's Bay, Canadian Tire CTC.TO, Reitmans RET.TO and others. It also owns about 10 Zellers outlets, which are now being converted into Target stores.

For H&R, this is a story about "getting better, getting stronger and buying at a time when there is a game-changer out there called Target," said H&R's Chief Executive Officer Tom Hofstedter, on a conference call on Thursday.

The friendly cash and equity deal, announced late on Wednesday, values Primaris at about C$2.76 billion ($2.8 billion) and it marginally trumps an all-cash C$2.63 billion hostile bid made in December by a consortium being led by Canada's KingSett Capital.

"This really, really is an opportunity that is once in a lifetime at a time when the changing landscape for retail is going to make tremendous value for these assets," he said on the call with analysts and investors.

But many investors on the call expressed dismay at the size of the break-up fee being offered to H&R if the deal fails, as it potentially scuttles any hope of a rival offer or a sweetened bid from the KingSett-led consortium.

Primaris CEO John Morrison defended the size of the C$106.6 million break-up fee. He said the company accepted the H&R bid only after reviewing other offers during its review process.
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